The global cardiac rhythm management (CRM) device market is massive, generating about $9.4 billion in revenue in the US, big four European countries (France, Germany, Italy, and the UK), and Japan in 2011. As far as medtech markets go, this makes it one of the biggest money generators out there. Combine this with the fact that there are relatively few competitors in this space and you?d think that this situation must be pretty good for the companies involved. This market is not, however, without its challenges.
First of all, this market is already pretty mature, and growth potential is therefore not great. Second, this market has been plagued by some serious negative publicity recently, most notably, controversy surrounding implantable cardioverter defibrillator (ICD) leads?and the debate is ongoing. Prices are also continuing to decline due to a weaker economic climate as well as only minor device innovation. As a result, the three big CRM device companies?Medtronic, St. Jude Medical, and Boston Scientific?have been struggling to maintain their revenues in this industry.
In its most recent earnings call, Medtronic estimated that the US ICD market fell 4% from May to July 2012, which the company mentioned as a fairly good result compared to previous quarters. The company is already partway through a 2012 restructuring involving cutting 1,000 jobs. Meanwhile, St. Jude Medical announced a restructuring of its business and eliminated 300 jobs in response to what it calls ?challenging market conditions?. A company spokesperson for Boston Scientific also confirmed that the company will be doing some restructuring and layoffs, although the exact amount of jobs that will be cut remains unknown.
So while CRM devices will continue to represent one of the largest medtech markets and be a significant revenue source, competitors in this market shouldn?t expect much growth in the coming years. In fact, as evidence shows, companies have already braced for a decline.